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One of the things we’ve looked at before is prop firm pay out claims.
Saying that you paid out a lot of money to someone, giving that person a PDF with a QR code on it, and then telling them to share the PDF so that everyone can see the QR code is a good way to market your products.
However, figuring out whether those payouts are real has always been a bit of a challenge (no pun intended).
And sometimes you do have to question the logic of certain payout claims.
Let’s take FundedNext as an example. On their homepage, FundedNext says that they have…
- 125K+ accounts
- 43k+ rewarded traders
- >$150m in payouts
So let’s run through the numbers quickly and see if they make sense.
One figure I have heard is that the average person buys three challenges. That means if there are 125k accounts, it would mean 375k challenge purchases.
One other source tells me the average is actually two challenge purchases. If that was the case then you would have 250k challenge purchases.
Recently we published a guest post on prop firm marketing from Stanislav Galandzovsky, who has worked with 7 props and was previously Head of User Acquisition at NAGA.
Stanislav has hard data on average purchase prices from a number of emerging market countries. The highest was Brazil with $114. FundedNext seems like it gets the bulk of its web traffic from these kinds of emerging markets, so it’s probably fair to assume its average purchase price is in that sort of range.
However, we can be generous and assume it’s much higher, let’s say $400 or $500.
Now you can start to do some basic maths…
| Average purchase price | Average Challenge Buys | Total accounts | Total Revenue |
| $500 | 3 | 125k | $187,500,000 |
| $400 | 3 | 125k | $150,000,000 |
| $300 | 3 | 125k | $112,500,000 |
| Average purchase price | Average Challenge Buys | Total Accounts | Total Revenue |
| $500 | 2.5 | 125k | $156,250,000 |
| $400 | 2.5 | 125k | $125,000,000 |
| $300 | 2.5 | 125k | $93,750,000 |
| Average purchase price | Average Challenge Buys | Total Accounts | Total Revenue |
| $500 | 2 | 125k | $125,000,000 |
| $400 | 2 | 125k | $100,000,000 |
| $300 | 2 | 125k | $75,000,000 |
However, as noted, this is being somewhat generous. One source tells us that a more ‘normal’ average purchase price would be $165. This fits more with the data you can see in Stanislav’s article.
On that basis, you would have these figures…
| Average purchase price | Average Challenge Buys | Total Accounts | Total Revenue |
| $165 | 3 | 125k | $61,875,000 |
| $165 | 2.5 | 125k | $51,562,500 |
| $165 | 2 | 125k | $41,250,000 |
The bottom line?
If you have paid out $150m, you would have to make a lot more than that in order to keep going.
But if we run through the numbers that FundedNext themselves put out, it’s kind of hard to understand how they are making the amount of payments they claim to be, based on the numbers they published on their own website’s homepage.
As they like to say online…
Really gets the noggin’ a-joggin.
